During the collapse of the Soviet Empire, Mikhail Gorbachev promoted the so-called "Third Way" as an alternative to free markets. This new way of governing would be neither capitalist nor communist, but something in between. The Third Way flopped in Russia. But Bill Clinton thinks it will work here.

On November 14, 1998, while most of us were distracted by sex scandals, The New York Times quietly reported that, in response to the growing worldwide recession, "Mr. Clinton has proposed a `third way' between capitalism and socialism."

Actually, Clinton has been touting the Third Way since 1992. But his evasive language prevented most people from figuring out what he meant by it.

"We have moved past the sterile debate between those who say government is the enemy and those who say government is the answer," Clinton said in his 1998 State of the Union address. "My fellow Americans, we have found a third way."

Of course, most Americans didn't even know we were looking for one. But now that we've found it, how does it work?

Among other things, the Third Way calls for business and government to join hands as "partners."

"We are working with business to use technology, research and market incentives to meet national goals," Clinton told the Economic Club of Detroit in February. "Some have called this political philosophy the third way."

What Clinton means by this gobbledygook is that Big Business will own the economy (as under capitalism), while Big Government runs it (as under socialism).

Corporations will be bribed into obedience through subsidies, tax breaks, customized legislation and other special privileges.

It all sounds very cozy. But what would life be like under such a regime? History offers some alarming clues.

"National Socialist Germany has created a new economic doctrine," boasted Adolf Hitler in 1939, "which views ... the economy as the servant of the people." Hitler exemplified the Third Way. He left industry in private hands, but appointed government bureaucrats to run it.

Production goals were set and price controls imposed from Berlin. Jobs were created through public works, tax incentives and government credits.

"Hitler ... anticipated modern economic policy," enthused liberal economist John Kenneth Galbraith in 1973. "That a nation oppressed by economic fear would respond to Hitler as Americans did to FDR is not surprising."

Nor should it surprise us that some might look back with nostalgia on Hitler's strong-arm tactics, now that global depression lurks around the corner. Is the Third Way a coded expression for fascism? Perhaps.

This new ideology does not come with jackboots, goose-stepping thugs or delirious crowds shouting, "Sieg Heil!" But maybe it doesn't have to. Back in 1980, a leftwing political scientist and urban studies professor named Bertram Gross, in his book Friendly Fascism, foretold a kinder, gentler brand of tyranny.

"Anyone looking for black shirts, mass parties or men on horseback will miss the telltale clues of this creeping fascism..." he wrote. "In America, it would be supermodern and multiethnic -- as American as Madison Avenue, executive luncheons, credit cards and apple pie. It would be fascism with a smile."

Most people would accept the new order without distress, Gross predicted. They would have fewer rights, of course, but more gadgets, perks and entertainments. Troublemakers would be blacklisted and discredited, but rarely jailed or killed. When violence became necessary, it would be done discreetly.

"One can look forward to improved capabilities ... for the use of ... induced heart failure ... induced suicide ... and `accidental' automobile fatalities," wrote Gross.

The author of Friendly Fascism was no wild-eyed Cassandra. He was a leading architect of liberal social policy under presidents Roosevelt, Truman and Carter. As such, Gross unwittingly helped build the partnership of Big Government and Big Business that he later decried. He recognized his guilt only late in life.

While writing his book, Gross dreamed that he was searching through a huge, empty house for "friendly fascists." He found one at last.

"I flung open one of the doors," Gross writes. "And there sitting at a typewriter and smiling back at me, I saw myself."

Over the years, Gross had helped draft such Big Government legislation as the full-employment bills of 1944 and 1945, and the Employment Act of 1946.

"I sought solutions for America's ills ... through more power in the hands of central government," Gross admits. "In this I was not alone. Almost all my fellow planners, reformers, social scientists, and urbanists presumed the benevolence of more concentrated government power."

But they were wrong. Gross realized that centralized power was, in fact, the linchpin of tyranny. "Big Business-Big Government partnerships ...," he wrote, "were the central facts behind the power structures of old fascism in the days of Mussolini, Hitler and the Japanese empire builders. ... I see Big Business and Big Government as a joint danger."

If only the Clinton cheerleaders were capable of such introspection. Gross died in 1997. But his spirit lives on, a fading spark of leftwing conscience, unsung and unheeded in the mad rush to the Third Way.

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